Viet Nam - A Guide for Business and Investment - asean-korea centre

BCCsA BCC is an agreement between one or more foreigninvestors and one or more Vietnamese partners withthe objective of cooperating to operate one or morespecific business activities. This form of investmentdoes not constitute a new legal entity and the investorshave unlimited liability for the debts of the BCC. Thisform of investment is generally only chosen by foreigninvestors with respect to projects where investment isrestricted to a BCC, such as certain telecommunicationsprojects or projects in relation to airline, railwayor sea transportation. A BCC provides, however, moreflexibility than a joint venture or a 100%FOE. Within theframework of Vietnamese law, the parties involved arefree to decide on the subject, contents, interests, obligationsand responsibilities of and relations among theparties, and to specify these in the contract.7. Other facilities for businessand investment in Viet NamBranchesThis is not a common form of foreign direct investmentbut banks, tobacco companies, airlines, law firms, andforeign companies operating in fields of culture, education,tourism are allowed to establish branches in VietNam. Foreign companies may also establish branchesin Viet Nam to conduct trading activities and activitiesdirectly related to trading of goods. The establishmentof such trading branches and the scope of commercialactivities of such trading branches, however, will onlybe available as scheduled in Vietnam’s internationalcommitments. In terms of law, the establishment of aforeign company branch is simpler than the establishmentof a 100%FOE with the difference that a 100%FOE is a Vietnamese legal entity separate from its parentcompany while a branch still holds foreign legalentity status and is dependent on its parent company.Branches of foreign companies in Viet Nam are alsodifferent from representative offices in the way that abranch is allowed to conduct commercial activities inViet Nam.Representative officesForeign companies having business relations with VietNam, or investment projects in Viet Nam, can apply toopen representative offices in Viet Nam. A representativeoffice is not an independent legal entity and is notallowed to conduct direct commercial activities (suchas execution of contracts, direct payment or receiptof moneys, sale or purchase of goods or provision ofservices). However, a representative office can:• act as a liaison office to study the business environment;• search for trade and/or investment opportunitiesand partners;• act on behalf of its head office to negotiate andsign contracts for the supply or purchase of goodsand services at the authorisation of the parentcompany (care needs to be taken for tax purposes);• supervise and accelerate the implementation ofcontracts;• act on behalf of the parent company to superviseand direct the implementation of investment projectsin Viet Nam;• Publicise and promote its company’s goods and/orservices.A representative office may, however, not engage inany profit generating activities.Build - operate - transfer (BOT), Build -transfer (BT) and Build - transfer - operate(BTO) ContractsForeign investors may sign a BOT, BT and BTO contractwith a competent State body to implement infrastructureconstruction projects in Vietnam often in the fieldsof traffic, electricity production and trade, water supplyor drainage, waste treatment. Rights and obligations offoreign investor will be regulated by the signed BOT, BTand BTO contract.Under the BOT form, the investor is fully in chargeof construction and management of a project over aspecific duration after which the project is to be transferredto the State without any compensation.Under the BTO form, title has to be transferred to theState immediately upon completion of constructionbut the State allows the investor to operate the projectover a period of time agreed by both parties in theViet Nam - A Guide for Business and Investment 31PART III. BUSINESS AND FOREIGN INVESTMENT ENVIRONMENT